Vietnam: Imported ferrous scrap offers stable; buyers inactive amid low rebar demand
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Imported ferrous scrap prices in Vietnam held steady despite a lack of demand amid a seasonal lull impacting the rebar market. According to sources, the rainy season has led to reduced construction activities further decreasing the already-low demand for rebar.
Vietnamese mills are expected to reduce production in June and July due to the rains which adversely affect construction activities. This reduction in production has resulted in a limited appetite for deep-sea scrap. As a result, Vietnamese steelmakers have extended their silence in the deep-sea market.
Market participants acknowledge that while buyers are attempting to push prices down, sellers are unlikely to go below $370/t due to limited supply. Consequently, the limited availability of scrap from both the US and Europe may prompt an increase in prices soon, potentially leading mills to proceed with restocking as part of their regular monthly cycle.
Offers for US-origin bulk HMS (80:20) were heard at $395-400/t CFR Vietnam over the past few days. Market participants estimated the prevailing workable price for most buyers at $380-385/t CFR Vietnam.
BigMint's weekly assessment for US bulk HMS (80:20) stood at around $385/t CFR Vietnam, stable w-o-w.
Vietnamese mills showed a slight preference for Japanese and Hong Kong-origin scrap due to their smaller tonnages and lower costs. Deals for Japanese H2 scrap were concluded at $370-375/t CFR Vietnam during last week. Offers for Japanese H2 scrap were heard at $375-380/t CFR Vietnam, with bids at $363-368/t CFR.
BigMint's weekly assessment for Japanese H2 scrap was reportedly in the range of $372-375/t CFR Vietnam, unchanged w-o-w.
Influencing factors
Market sources cited several factors driving slower demand in the domestic longs segment, including the rainy season, declining domestic scrap prices, and sufficient inventory levels due to ample procurement by buyers earlier in April. A trader informed, "There is insufficient support seen for Vietnamese longs prices, only value-adding processors who import and re-export might be able to purchase small volumes, but even then, prices are slow to follow."
Domestic scrap market:
Vietnamese steel mills continued to push domestic scrap prices lower in the week. In northern Vietnam, prices for Type 1 or H2-equivalent 3-6mm scrap fell by VND 100/kg ($4/t) to VND 9,600-9,900/kg ($376-388/t). In the southern region, prices for the same grade decreased by VND 100/kg to VND 8,900-9,000/kg, according to mill sources.
Local scrap prices are down about VND 100/kg as demand is low, and mills do not even need imported scrap. The decline in demand for scrap has led some mills to purchase induction furnace billets instead of scrap, as per market sources.
Induction furnace billet prices were reported at VND 12,500/kg ex-works ($490/t). These billets are competitively priced against EAF-route billets produced from scrap, making them an attractive alternative for mills. A buyer highlighted the cost-effectiveness of induction furnace billets in the current market condition.
Vietnamese billets recently became the most competitive price-wise in the South-east Asian seaborne market. Offers for 3SP 150 mm grade were at $500/t FOB, compared to Indonesian and Chinese material of the same specifications offered at $505-510/t FOB as of last weekend, according to market participants.
Outlook: Despite the current steady prices, steelmakers indicated that most EAF mills are still opting for cheaper domestic scrap, importing billets, or reducing capacity. It is estimated that the EAF mills are generally operating at around 35-40% capacity. This trend is expected to continue as mills navigate low demand and seasonal production challenges, potentially influencing future scrap dynamics in Vietnam.
